How VAT or GST affects pricing and margin in each market.
Inputs
Results
Net margin %—
Net revenue (after VAT)
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VAT remitted
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Net profit
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To restore X% margin, raise price to:
Target Margin
Required Price
Change vs Current
Market comparison at current price
Market
VAT %
Net Revenue
Net Margin
About this calculator
VAT and GST are the silent margin killer of international expansion. A US brand pricing at $100 in their home market and €100 in Germany doesn\'t realize they\'re actually receiving only €84 net after 19% VAT — losing 16% of revenue to a tax that doesn\'t exist domestically. Multiply that across markets and you have systematic margin erosion.
The math is simple but the implications are large. Net revenue = price / (1 + VAT_rate). On a €100 sale at 20% VAT, you receive €83.33; €16.67 goes to the tax authority. Subtract COGS, shipping, processing, and you\'re working with a much thinner contribution margin than the label price suggests.
The strategic decision is whether to absorb VAT (keep prices similar across markets, accept lower margins in high-VAT countries) or pass it through (raise local prices to offset the tax). Most successful international DTC brands raise local prices 15-25% in high-VAT markets to maintain consistent USD-equivalent margin. This calculator shows you exactly what price you need to charge to hit any target margin in any tax regime.
Watch out for the fulfillment-side VAT too. Imports into the EU above €150 are subject to VAT plus duties at customs unless you\'re registered under IOSS (Import One-Stop Shop). Many DTC brands stumble on this — selling at "VAT-free" US prices, then customers get surprise VAT bills at delivery, leading to refusals and chargebacks. Pair this with the Currency Conversion Margin and International Shipping Cost calculators for full international economics.
Frequently asked questions
What's the difference between VAT and GST?
Functionally similar — both are consumption taxes added at sale. VAT is the European/UK term (5-27% depending on country). GST is used in Australia, Canada, India, Singapore, NZ (5-15% typical). Both flow through to the consumer's final price; merchants collect and remit.
Should my international prices include VAT/GST?
Yes — local consumer expectation is tax-inclusive pricing. UK customers expect £100 to mean £100 final price, not £100 + 20% VAT. Display tax-inclusive pricing per market or you'll see massive cart abandonment from sticker-shock at checkout.
Do I have to register for VAT/GST in every country I sell to?
Depends on volume and country rules. EU has a €10K total threshold across all member states under OSS scheme. UK has £85K threshold. Australia GST is required at AU$75K. Below threshold, you can sell without registering but lose some legitimacy in B2B segments.
How does VAT affect my margin?
If you don't adjust pricing, VAT eats your margin directly. A €100 product at 25% margin (€75 cost basis) sold in Germany at €100 with 19% VAT means you get €100 / 1.19 = €84 net. Your effective margin drops from 25% to 11%. Most operators raise local prices to absorb VAT — common pattern is raising US-equivalent price by 15-25% in EU markets.
What about reverse-charge / B2B?
B2B sales (with valid VAT number) typically use reverse-charge mechanism — you don't add VAT, the buyer self-accounts. This is automatic on platforms like Shopify Markets when buyer provides VAT number. Most ecommerce is B2C so reverse-charge doesn't usually apply.